Buildmark is an insurance policy that is valid for 10 years from the date on which the house is purchased. For the first two years, it covers virtually everything in the home; if anything fails within the first two years, the home owner can make a valid claim against the policy. Our internal process within the first two years is to give the builder the opportunity to address any complaint or defect; if they fail to do that, NHBC takes over the process and rectifies the situation to the satisfaction of the home owner. When we investigate claims within the first two years—what we call section 2 claims—and the builder does not attend to them, in about 75 per cent of cases we find in favour of the home owner.
For the last eight years of the policy, not everything in the house is covered; it does not cover plumbing, electrical wiring, kitchen fittings or central heating systems, but everything else is covered. If there is a defect during the last eight years of the policy, the home owner works with NHBC to try to resolve it. If it is a serious or major defect, we may ask the builder to become involved, although, equally, we may not and may just try to resolve it. The insurance policy is structured for its last eight years in such a way that, for the defect to be found valid under the terms of the policy, it must be in breach of our building standards—we have our own building standards—and it must cost more than £1,500 to fix. The policy has been like that for a long time. If a defect meets those criteria, we accept that there is a valid claim.
We are regulated by the Financial Conduct Authority and the Prudential Regulation Authority, so the home owner has back-up if they disagree with us. We advise them that they have the right to refer the matter to the Financial Ombudsman Service, who will make a determination about whether we have managed the complaint properly. It is mandatory that we respond to the ombudsman’s findings and do not challenge them.